The company follows mercantile basis of accounting and recognizes
income and expenses on accrual basis except otherwise mentioned. The
accounts are prepared on historical cost basis on the principles of
going concern. Accounting policies not specifically referred are
consistent and in consonance with generally accepted accounting
(2) Use of Estimates :
The presentation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reportable amount of assets and
liabilities on the date of financial statement and the reportable
amount of revenue and expenses during the reporting period. Difference
between the actual result and estimates are recognized in the year in
which the results known/materialized.
(3) Revenue Recognition:
(i) Revenue in respect of sales of goods is recognized at the point of
dispatch/ passage of title of goods to the customer. Sales are net of
excise duty and sales tax.
(ii) Insurance and other claims being unascertained are accounted on
(4) Fixed Assets:
Fixed Assets are stated at cost of acquisition or construction or at
revalued amounts wherever such assets have been revalued less
(5) Depreciation :
Depreciation on Fixed assets has been provided on written down value as
per the rates prescribed in schedule XIV of the companies Act, 1956.
Depreciation on additions has been provided on pro-rata basis from the
date on which asset is capitalized/ put to use, wherever applicable.
Fixed assets costing Rs.5,000/- or less are being fully depreciated in
the year of acquisition.
(6) Impairment of Assets :
The carrying amounts of tangible fixed assets are reviewed for
impairment, if events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. If there are
indicators of impairment, an assessment is made to determine whether
the asset''s carrying value exceeds its recoverable amount. Whenever the
carrying value of an asset exceeds its recoverable amount, impairment
is charged to profit and loss account.
Recoverable amounts are estimated for individual assets where feasible,
otherwise to the relevant cash generating unit.
Investments are classified into current and long term investment.
Long term investments are carried at cost. Provision for diminution is
made in the value of investment to recognize a decline if any, other
Current investments are stated at lower of cost and net realizable
(8) Export Incentive:
Export incentives on trading export such as import entitlement, advance
license are accounted for on the realization/ sale thereof.
(9) Employee Benefits:
(i) Gratuity and leave encashment payable to employees, who are
eligible are accounted f or on accrual basis as it will become due for
payment on last day of accounting year.
(ii) Provident fund paid/ payable during the year is charged to Profit
& Loss Account.
(i) Raw materials, stores & spares, consumables are valued at actual
cost on FIFO basis.
(ii) Stock-in-process is valued at weighted average cost which includes
cost of raw material,
stores & spares and other consumable consumed and manufacturing
expenses, production overheads and depreciation.
(iii) Finished goods are valued at cost or at estimated realizable
value whichever is lower. Cost for this purpose includes raw materials,
wages, manufacturing expenses, production overheads and depreciation.
(iv) Scrap is valued at estimated realizable value.
(v) Crazy/ wastage arising out of production is valued at net
(11) Foreign Currency Transactions:
(i) Foreign Currency transactions are accounted for at the exchange
rate prevailing on the date of such transaction, where such
transactions are not covered by forward contracts. Gains/ Losses
arising out of the fluctuation in the exchange rate are accounted for
(ii) Current assets & liabilities are translated at year-end rate.
Exchange fluctuation, if any, are adjusted in profit and loss account
(except related to fixed assets) during the year and the related
current assets and liabilities accordingly restated in the balance
(iii) In respect of foreign currency taken for acquisition of fixed
assets, any fluctuation arising due to such transactions are adjusted
in the cost of the respective fixed assets.
a) Current tax is the provision made for Income Tax liability, if any
on profits in accordance with the provisions of the Income Tax Act,
b) Deferred tax is recognized on timing differences, being the
difference resulting from the recognition of items in the financial
statements and in examining the current income tax.
c) Deferred tax assets are recognized on unabsorbed depreciation/
business losses to the extent that there is virtual certainty supported
by convincing evidences that sufficient future taxable income will be
available against which such deferred tax assets can be realized and on
expenses incurred but to be allowed on payment basis as per provision
of the Income Tax Act, 1961
d) Deferred tax assets and liabilities are measured using the tax rate
and tax law that have been enacted on the Balance Sheet date.
(13) Contingent Liabilities:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the